IBM’s Amazon Lawsuit Using Classic Schoolyard Bully Tactics

Written by Evan Schuman
October 24th, 2006

IBM was being painfully honest when it said this lawsuit is about generating more licensing revenue. What they’re not saying is that the desired revenue is not from Amazon.

IBM’s recent lawsuit against Amazon for infringing an 18-year-old patent has little to do with attacking the underpinnings of E-Commerce nor does IBM truly believe that Amazon ripped off their ideas. It’s all about the same schoolyard tactics that have been around for centuries.

Think about the classic advice given to the new boy in school. On his first day, he discovers that the school has the requisite bullies. What he does that first day on the playground will likely set the tenor for the rest of the year. The advice is that he is go up to the biggest and meanest bully and stare him down, fighting if necessary. Why? Win or lose, he’s sending out a message and making it much more likely the other bullies will leave him alone.

IBM is being painfully honest when it says that the lawsuit is about boosting licensing revenue. A cynical view is that IBM may not even care that much about beating Amazon in court. IBM is negotiating with a large number of e-tailers, trying to get them to pay on some very old IBM patents that anticipated key E-Commerce issues, such as Web advertising and online catalogues.

The only reason those E-Commerce sites would pay is if they believed IBM would sue them otherwise. In the same way that the typical schoolyard bully’s tactical options are usually limited to “ignore,” “verbally torment” and “beat up,” IBM’s weapons against alleged patent infringers are limited to “ignoring,” “suing” and “threatening to sue.”

By taking on the giant of E-Commerce, IBM is hoping that the other sites will think, “If they sued Amazon, then they’ll probably sue us, too. Settle.” If it wins the Amazon lawsuit, that’s gravy. Sweet-tasting and profitable gravy perhaps, but gravy nonetheless.

The patents that IBM says are being violated—and we’ve included links to the full texts of those Patents—are: US 5,796,967 – Presenting Applications in an Interactive Service; US 5,442,771 – Storing Data in an Interactive Network; US 7,072,849 – Presenting Advertising in an Interactive Service; US 5,446,891 –
Adjusting Hypertext Links with Weighted User Goals and Activities
; and US 5,319,542 – Ordering Items Using an Electronic Catalogue.

In talking with industry analysts and vendors about the IBM lawsuit, a popular theme is that IBM did something bad when it applied for patents for such obvious capabilities and that this is just because Amazon’s one-click checkout patent application was a similar overreach.

I must respectfully disagree. First of all, even if the technique was extremely broad and obvious—the one-click Amazon patent might be—it’s certainly not fair to criticize the company that applies. It’s the Patent office that are the ones that approved it and any criticism about the wisdom of such a move rightfully needs to be directed there.

On the IBM patents, however, I think Big Blue deserves even more credit. Take a peek at the actual filings and remember that they were written before the Web existed in any meaningful way, some dating as far back as 1988.

To get our historical landmarkers set properly, let’s put 1988 into context. The Web was created by Tim Berners-Lee in 1989. He didn’t have a working system deployed until 1990. From ’90 to ’92, the Web was still a well-kept secret because it was text-only. It wasn’t until 1993–when NCSA Mosaic was launched as the first graphical Web browser—did the business world start to take notice. I usually think of 1994 as when the Web truly started to take off.

With those dates in mind, remember that IBM filed those patent applications back in ’88, ’90 and ’92. Now go back and look at the full texts of those patents. Say what you will about IBM, but those are some pretty impressive and amazing patent applications. I’m not saying Big Blue is entirely in the right here, but I think that kind of insight and vision deserves a little respect. (OK, so they filed them when they owned Prodigy, so they get a few debits for that.)

The problem with fighting patent violations is that they are so incredibly easy to avoid. The patents from IBM are incredibly detailed. Amazon can simply argue that they are not doing it the exact same way as IBM described, therefore there is no violation. Is it close? How different need it be to avoid being in violation? That’s where lawyers earn their GNP salaries.

Let’s go back to the original premise for a moment. Should an E-Commerce player give in and pay IBM royalties for housing an electronic catalogue or displaying a banner ad?

Part of the problem here is in the timing. IBM has had these patents for a long time. Why didn’t they shout this from the highest Web tree back in ’94 or ’95? Or ’99? Even in the Amazon case, IBM admits that it has been negotiating for more than four years.

To then announce it on the even of the holiday shopping season—where many retailers make a huge percentage of their money—seems suspicious. Did IBM want to sit silently by while people built elaborate sites specifically so they could charge royalties? How much deliberate silence can be tolerated before it will be considered a surrender of those rights?

If I own a jewelry store and I watch customers—every day—taking gems from my front counter. This happens for a dozen years. One day, I point to a customer and shout, “Police! I’m being robbed. Arrest that man!” Is that the fact that I let thousands of customers get away with it for a dozen years relevant?

Most merchants won’t ponder such philosophical issues. “Any new kid willing to push around the Amazon bully probably deserves respect, but he definitely deserves some distance,” they’ll think, adding, “And to be safe, I think I’ll give him my lunch money.”


2 Comments | Read IBM’s Amazon Lawsuit Using Classic Schoolyard Bully Tactics

  1. Owen Says:

    What about Unisys and their LZW patent that they quietly sat on while GIF (which used the LZW compression algorithm) became the standard for computer images? Then they screamed patent infringement bloody murder, sued and WON! Fortunately, that patent has expired….

  2. R M Ramage Says:

    Hello Sir—

    As early as 1979, Munson Sporting Goods and Munson Management Systems in Costa Mesa, California, were conducting e-commerce thru a number of devices:

    1) salesmen carried a ‘blue clipboard’ which talked to the “red machine” at the central warehouse.

    2) several chains of retail stores were running Munson software and doing e-commerce thru Datatrol cash registers.

    2a) Alltime sold watches and had 300 stores

    2b) The Federated Group had 80 some stores and was doing $500 million per year as of 1989

    3) Munson’s lookup of inventory by generic means without part numbers was used by many businesses.

    3a) National Capacitor

    3b) Munson Sporting Goods

    3c) Akai which sold stereos

    On the one hand this might seem like trivial exceptions, but these techniques were discussed at conventions and advertised.

    These examples have helped several companies defeat suits about patent infringement. The Pangea suits fell to these examples.

    R M Ramage, Senior Programmer at Munson


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